Budget 2020 - the Key Points

On the 11th March 2020, the Chancellor of the Exchequer Rishi Sunak delivered his first budget. Here are the key points:

Measures to mitigate the impact of Coronavirus

• £12 billion package of tax and spending measures including grants and hardship funds for people and businesses affected
• Statutory Sick Pay to be payable from first day’s absence and fully funded by the Government for 14 days; support also for workers in gig economy and self-employed, and relaxed conditions for those who self-isolate
• Business rates relief for the next year increased from 50% to 100% for retail businesses with rateable values up to £51,000; this relief extended to leisure and hospitality businesses as well, and further relief for small pubs
• Small businesses already eligible for 100% rates relief to receive £3,000 cash payment
• Businesses and individuals with cash flow difficulties promised ‘Time to Pay’ their taxes with a dedicated HMRC helpline

Tax measures with immediate effect

• Lifetime limit for gains eligible for Entrepreneurs’ Relief (taxed at 10% instead of 20%) reduced from £10m to £1mfor disposals from Budget day
• Duties on alcoholic drinks and fuel frozen

Tax year 2020/21

• No changes to personal income tax allowances and rates: 2019/20 figures continue for a second year, as expected
• Increase in threshold for National Insurance Contributions from £8,632 to £9,500
• Increase in thresholds for ‘Annual Allowance pensions taper’ from £110,000 and £150,000 to £200,000 and £240,000
• Lifetime Allowance for pensions increased in line with inflation to £1,073,100
• ISA allowance remains £20,000 per year, but Junior ISA/Child Trust Fund limits rise from £4,368 to £9,000
• As announced in advance, Corporation Tax rate remains 19% rather than being reduced to 17%
• No changes announced to ‘off-payroll working’ (IR35) rules, so they will apply to larger private sector employers from 6 April 2020 as previously announced
• No change announced to new rules for reporting and paying CGT on chargeable residential property, so deadline becomes 30 days
• Employment Allowance for small businesses increased from £3,000 to £4,000 of Employers’ NIC
• Research & Development expenditure credit increased from 12% to 13%
• Structures and Buildings Allowance increased from 2% to 3%

Tax measures coming into effect later

• VAT ‘Domestic Reverse Charge’ on construction services, deferred from 1 October 2019, confirmed for introduction on 1 October 2020
• VAT zero-rating to apply to digital versions of newspapers and books as well as printed versions from 1 December 2020
• Abolition of VAT on women’s sanitary products from 1 January 2021
• VAT on imports to be dealt with by ‘postponed accounting’ (on the VAT return, not on the docks) by businesses from 1 January 2021
• Stamp Duty Land Tax surcharge of 2% introduced for non-resident buyers of UK property from 1 April 2021
• Tax relief on ‘red diesel’ removed for most sectors but retained for agriculture, home heating and rail in April 2022
• New plastic packaging tax for manufacturers in April 2022, as well as a shift in Climate Change Levy from electricity to gas